Amazon may have sold its first tablet at a slight loss to gain traction in the market, but the online retail giant appears to be going a different route with its first smartphone, the Amazon Fire Phone.

In fact, Amazon looks to be making a tidy profit on its first generation of Fire Phones, right in line with phone makers selling handsets at similar prices, according to IHS Technology.

The research firm did a teardown of the Amazon Fire Phone, which retails at the unsubsidized price of $650, estimating a bill of materials (BOM) of $201 for the handset. Tack on an extra $4 for manufacturing and Amazon is still pocketing a tidy $445 per phone sold, according to IHS.

If so, it marks a different approach than the one Amazon took when it released its first Kindle Fire tablet running a heavily customized version of Android back in 2011. Back then, IHS and others determined that Amazon was likely selling its tablets at cost and possibly even taking about a $10 hit on each unit sold.

Of course, Amazon faced different circumstances in late 2011. Apple's iPad dominated the consumer tablet space and several other Android-based pretenders had flamed out on the global stage. Amazon wanted to get its first tablet into the hands of consumers first and foremost, so slapping a heavily reduced price tag on them made sense. What's more, industry watchers suspected that the company's strategy with the Fire wasn't so much to make margins on the device itself, but to populate the world with tablets loaded with tools and incentives designed to push their users towards buying stuff on Amazon.com.

Several years later, Amazon has experience and credibility as a device maker. The strategy of using the Fire Phone, like the Kindle Fire, as a mobile portal with the main purpose of hustling customers into Amazon.com's shopping aisles is probably still in place. But Amazon apparently no longer thinks it needs to give away its devices essentially for free.

IHS also contended that Amazon may have more of an investment to recoup with the Fire Phone, as compared with the original Kindle Fire, as the new smartphone packs in some unique and no doubt expensive-to-develop technologies.

"The features that differentiate the Amazon Fire Phoneparticularly its unique Dynamic Perspective interfacerequired the development of specialized hardware and software," Andrew Rassweiler, senior director of cost benchmarking services for IHS, said in a statement.

"This kind of R&D effort is expensive and can only be paid off through major sales success. In a highly competitive smartphone space dominated by Samsung and Apple, Amazon will face the considerable challenge of selling enough Fire Phones to make its R&D effort worthwhile."

But will consumers bite? Ian Fogg, senior director for mobile media at HIS, said it's risky for Amazon to price the Fire Phone in the same territory as market leaders Apple and Samsung do with their flagship phones.

"This is a high-risk launch-price strategy which is unsustainable for a smartphone market entrant like Amazon. Simply having a well-known brand on the box is not enough to sell smartphones, as Nokia and Motorola know well," Fogg said.

For the lowdown on the BOM for the Amazon Fire Phone, check out the IHS chart below. For more details about the chips, cameras, and other hardware inside Amazon's first smartphone, take a look at the recent teardown report from iFixit, as well as our own Hands On With the Amazon Fire Phone and the slideshow above.

Damon Poeter got his start in journalism working for the English-language daily newspaper The Nation in Bangkok, Thailand. He covered everything from local news to sports and entertainment before settling on technology in the mid-2000s. Prior to joining PCMag, Damon worked at CRN and the Gilroy Dispatch. He has also written for the San Francisco Chronicle and Japan Times, among other newspapers and periodicals.
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